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We Have Assisted in the Startup of Some of the Most Successful E-Commerce and Electronic Entertainment Companies in the World

Ira P. RothkenIn addition to our robust litigation practice we assist electronic entertainment, high technology, and e-commerce companies in their business, startup, and legal transactions. For example, since the inception of the "commercialized" internet in the mid 1990s, we have represented some of the largest and most successful web sites in the world on a huge range of matters from startup issues to risk reduction strategies to e-commerce policies and agreements. In many instances we were called upon to handle issues where there was no clear precedent and thus we had to innovate a solution.

We have also helped start numerous successful electronic entertainment and videogame companies including Nihilistic Software, Pandemic Games, Telltale, and Arenanet. Ira P. Rothken, a member of IGDA, has spoken multiple times on how to start a videogame development company at the Computer Game Developers Conference (CGDC). Here is a sample of videogame development transactions in which we assisted our clients:

News

Megaupload, Kim Dotcom, and other interested parties filed their opening appellate brief today in Fourth Circuit Court of Appeals opposing the United States DOJ's attempt to use the Fugitive Disentitlement Doctrine as a procedural method of taking all of Kim Dotcom's and the other Megaupload parties' assets prior to trial and without any hearing on the merits of the underlying criminal claims.

According to Megaupload Appellate Counsel Michael Elkin from Winston & Strawn “the Megaupload defendants were branded by the DOJ as 'fugitives' for lawfully fighting extradition in New Zealand (where they reside with their families). The district court's denial of their basic rights to defend against asset forfeiture under a 'fugitive disentitlement' doctrine amounts to a violation of basic due process and we filed a brief today with the U.S. Fourth Circuit Court of Appeals seeking to reverse the injustice visited upon Megaupload and others who have been impacted by the Government's overreach."

According to Ira Rothken, Lead Global Counsel for Kim Dotcom and Megaupload “with our appeal today we are asking the Fourth Circuit to rule in favor of fairness, natural justice, and due process by stopping US efforts to take Kim Dotcom's global assets for doing nothing more than lawfully opposing extradition to the United States—a country he has never been to. The DOJ in our view is trying to abuse the Fugitive Disentitlement Doctrine by modifying it into an offensive weapon of asset forfeiture to punish those who fight extradition under lawful treaties, and a provocation for international discord. Today we ask the Court of Appeals for justice.”

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Megaupload and Kim Dotcom filed their opening appellate brief in the Fourth Circuit Court of Appeals today - here is an excerpt below:

In a separate criminal case, the government indicted several foreign defendants on copyright-related allegations. Instead of following typical extradition procedures—bringing the defendants to the United States pursuant to international law and then proving its case at trial before seeking forfeiture—the government took a much more aggressive approach. It brought this civil forfeiture case against foreign property owned by the defendants and others (collectively, “Claimants”) and, relying on the seldom-used “fugitive disentitlement” statute, argued that the owners’ claims to their foreign property should be stricken and the property immediately forfeited. According to the government, Claimants’ participation in extradition proceedings—and failure to immediately leave their homes, families, and busi- nesses to travel to the United States—rendered them “fugitives” seeking “to avoid ... prosecution.” 28 U.S.C. §2466(a)(1) (Addendum-A-2).

Accepting this argument, the district court disentitled Claimants from defending their rights to their property, based solely on their “non-appearance” in the separate criminal case and the government’s allegation that they are thereby “fugitives.” Without any hearing on the merits, the court then adjudged the property— all located abroad—immediately forfeited. In so doing, however, the court committed several reversible errors.

For starters, this Court’s precedent makes control over the defendant property a prerequisite to exercising in rem jurisdiction, and the district court lacked control over this foreign property. Further, the Claimants are foreign citizens and residents who would not be in the United States regardless of the criminal case. Yet, relying on both a misreading of §2466’s intent requirement and an improper assessment of an undeveloped evidentiary record, the court held that Claimants’ intent necessarily was “to avoid prosecution.” Finally, even if these hurdles could be overcome, allowing the government to seize Claimants’ property without an adversarial hearing would be unconstitutional. Claimants have been convicted of no crime; they are asserting established procedural and substantive rights abroad; and the government has never proved that their property should be forfeited.

In sum, the decision below upsets fundamental jurisdictional principles, misapplies the fugitive disentitlement statute, and violates both due process and the Supremacy Clause. If affirmed, that decision would hand the government unprecedented power. By stacking allegations of fugitive status on top of allegations of forfeitability, the government would obtain a roving worldwide license to indict residents of foreign countries who have never lived or worked in the United States and to take their foreign property—all without proving any wrongdoing. That is not how our justice system works. The judgments below should be vacated and the case either dismissed or remanded for trial on the merits...

Generally this internet e-commerce lawsuit, in which Ira P. Rothken represented the defendants, relates to a purported web traffic referral agreement under which plaintiff was allegedly paid only $5,000 of the millions it was owed for brokering referrals to defendants' websites. The relevant background was recounted in substantial detail in the Court's January 28, 2015 Order, which dismissed the First Amended Complaint with leave to amend.

"The plaintiff apparently believes a series of vague instant messages—sent over the course of two days, relating to a single purported scheme, and evincing no clear threat of repetition—constitutes a pattern of racketeering activity under the statute. The Court disagrees. See H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 242 (1989) ("Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy [the continuity prong of the pattern] requirement: Congress was concerned in RICO with long-term criminal conduct."); Turner v. Cook, 362 F.3d 1219, 1229 (9th Cir. 2004) ("[W]hile two predicate acts are required under the Act, they are not necessarily sufficient."). Each discrete instant message at issue was sent over a short period of time in the course of communications between one sender and one recipient. Each involved—at most—another link in the chain of an alleged fraud, whereby defendant ... attempted to induce the plaintiff to deliver referrals in the absence of any intent on the part of [defendant] to provide the promised compensation in return. Such allegations are insufficient to establish RICO liability..."

Megaupload and Kim Dotcom filed a supplemental brief in the United States District Court in Virginia today.

Here is an excerpt from the brief:

The Government’s reply (Dkt. 48-2) in support of its Motion to Strike (“Government’s MTS”) evidences an obvious misconception about the role and scope of fugitive disentitlement. By the Government’s account, the doctrine amounts to a magic button that, whenever pressed, results in immediate, incontestable forfeiture of any and all foreign assets the Government may seek from a foreign national who is contesting extradition while asserting ownership interests at home—no matter the facts, law, equities, or procedures, rights, and courts engaged abroad.

Further still, the Government wants to use its expansive reading of fugitive disentitlement as a global sword for cutting off foreign proceedings that are not to its liking. This comes through loud and clear from its briefing. See, e.g., Dkt. 48-2 at 36-37 (“More than $6 million of the restrained property in New Zealand has already been dissipated . . . and additional imminent requests for release are expected” while “[r]estrained property in Hong Kong remains under constant attack.”); Dkt. 65 at 4 (“As of December 2014, more than NZ$1 million (currently US $770,000) in restrained funds were released to the Dotcoms as ‘living expenses’ by the New Zealand courts.”).

To be clear, the Government’s grievance is not directed just against the Claimants—who are generally detained abroad, whose assets are restrained abroad, and who are using their assets only to the extent that the foreign courts now presiding over them see fit to award limited relief—so much as it is directed against the foreign courts that are continuing to have their fair say, if occasionally inconsistent with what the U.S. Government would prefer them to say. Although courts in New Zealand and Hong Kong are friendly to the United States, they have their own laws and their own views about, for instance, the import of binding treaty provisions, the presumption of innocence attaching to criminal defendants, and the imperative of funding adequate legal defense in a sprawling international case (or, more precisely, ever- expanding series of cases) that the Government years ago called one of “the largest criminal copyright cases ever brought by the United States.”1

The United States is thus trying to abuse the doctrine of fugitive disentitlement, transmogrifying it into an offensive weapon, a cover for precipitous, unjustified forfeiture, and a provocation for international discord. What fugitive disentitlement is actually meant to do, as the statute states, is simply to authorize a U.S. court—at its discretion, in appropriate cases, upon making necessary findings—to prevent someone who is actively out to avoid the reach of the United States “from using the resources of the courts of the United States.” Thus, fugitive disentitlement is properly called upon for the sake of preserving “efficient, dignified operation of the courts,” as the Supreme Court has said. Degen v. United States, 517 U.S. 820, 824 (1996). That is all it is meant to do. It is not meant to gratify a prosecutor’s sudden perceived need for speed by superseding otherwise applicable timelines, procedures and rights. It is not meant to supply a substantive warrant for forfeiture where there is otherwise none. It is not meant to coerce a criminal defendant into buckling to extradition and surrendering valid defenses otherwise pending abroad. And it is certainly not meant to trump foreign courts and usurp foreign proceedings. In all of these respects, the United States Government appears badly mistaken and in need of correction.

Megaupload, Kim Dotcom, and other interested parties filed submissions today in Federal District Court in the Eastern District of Virginia opposing the US DOJ's attempt to use the Fugitive Disentitlement Doctrine as a procedural method of taking all of Kim Dotcom's and the other parties' assets prior to trial and without any hearing on the merits of the underlying criminal claims. The motion was filed in the context of a forfeiture proceeding.

Here is an excerpt from the opposition brief filed today:

With its Motion to Strike (“Motion”), the United States Government is seeking to ward off inquiry by this Court into essential legal questions, including whether the Court has jurisdiction over the relevant subject matter; whether it has jurisdiction over the relevant foreign assets; whether the foreign assets at issue are traceable to any alleged crimes; and whether the alleged crimes even amount to crimes. Only by invoking “fugitive disentitlement” might the Government skip past glaring, fatal defects in its supposed case for civil forfeiture and obtain an unjust result that should otherwise be beyond reach. If the Government has its way, then it will win from this Court an order calling for forfeiture of tens of millions of dollars in Claimants’ foreign assets without the Court so much as permitting adversarial contest on the obvious, fundamental jurisdictional and merits questions otherwise looming before it.

According to the Government’s Motion, the fugitive disentitlement doctrine yields this disquieting result, depriving Claimants of threshold standing to contest forfeiture of their own assets abroad and trumping even threshold inquiry into jurisdiction. But the Government thereby distorts the concept of “fugitive” status beyond recognition. These Claimants never fled the United States to evade prosecution.

With its Motion to Strike (“Motion”), the United States Government is seeking to ward off inquiry by this Court into essential legal questions, including whether the Court has jurisdiction over the relevant subject matter; whether it has jurisdiction over the relevant foreign assets; whether the foreign assets at issue are traceable to any alleged crimes; and whether the alleged crimes even amount to crimes. Only by invoking “fugitive disentitlement” might the Government skip past glaring, fatal defects in its supposed case for civil forfeiture and obtain an unjust result that should otherwise be beyond reach. If the Government has its way, then it will win from this Court an order calling for forfeiture of tens of millions of dollars in Claimants’ foreign assets without the Court so much as permitting adversarial contest on the obvious, fundamental jurisdictional and merits questions otherwise looming before it. According to the Government’s Motion, the fugitive disentitlement doctrine yields this disquieting result, depriving Claimants of threshold standing to contest forfeiture of their own assets abroad and trumping even threshold inquiry into jurisdiction. But the Government thereby distorts the concept of “fugitive” status beyond recognition. These Claimants never fled the United States to evade prosecution...

Megaupload, Kim Dotcom, and other interested parties filed a motion today in Federal District Court in the Eastern District of Virginia asking the court to dismiss the copyright claims that make up the core of the US Government's criminal case against the defendants. The motion was filed in the context of a forfeiture proceeding. The motion, if successful, could have a serious adverse impact on the viability of the Government's novel criminal theories.

Here is an excerpt from from the motion to dismiss submissions filed today:

Nearly three years ago, the United States Government effectively wiped out Megaupload Limited, a cloud storage provider, along with related businesses, based on novel theories of criminal copyright infringement that were offered by the Government ex parte and have yet to be subjected to adversarial testing. Thus, the Government has already seized the criminal defendants’ websites, destroyed their business, and frozen their assets around the world—all without benefit of an evidentiary hearing or any semblance of due process.

Without even attempting to serve the corporate defendants per the Federal Rules of Criminal Procedure, the Government has exercised all its might in a concerted, calculated effort to foreclose any opportunity for the defendants to challenge the allegations against them and also to deprive them of the funds and other tools (including exculpatory evidence residing on servers, counsel of choice, and ability to appear) that would equip robust defense in the criminal proceedings.

But all that, for the Government, was not enough. Now it seeks to pile on against ostensibly defenseless targets with a parallel civil action, seeking civil forfeiture, based on the same alleged copyright crimes that, when scrutinized, turn out to be figments of the Government’s boundless imagination. In fact, the crimes for which the Government seeks to punish the Megaupload defendants (now within the civil as well as the criminal realm) do not exist. Although there is no such crime as secondary criminal copyright infringement, that is the crime on which the Government’s Superseding Indictment and instant Complaint are predicated. That is the nonexistent crime for which Megaupload was destroyed and all of its innocent users were denied their rightful property. That is the nonexistent crime for which individual defendants were arrested, in their homes and at gunpoint, back in January 2012. And that is the nonexistent crime for which the Government would now strip the criminal defendants, and their families, of all their assets.

Ira P. Rothken, founder of the Rothken Law Firm, has written for the Home Office Computing/Small Business Computing Magazine "Legal Matters" Column. Mr. Rothken has written numerous articles on protecting small businesses and the laws of "e-commerce." Mr. Rothken has appeared as a guest legal expert on television and radio including CNNfn (fax/e-mail marketing issues), CNN (internet privacy), KQED radio (computer keyboard injuries), FOX (internet gambling), NBC (internet copyright), CBS (internet privacy), CNET radio (internet copyright), KTVU Silicon Valley Business Report (software license agreements), TechTV (internet law), and Court TV (internet gambling issues and copyright litigation), and has been quoted in numerous publications including legal newsletters, newspapers (Wall Street Journal, NY Times, San Jose Mercury News, San Francisco Chronicle, Newsday), magazines, and law review articles. In addition, Mr. Rothken has spoken at numerous conferences and seminars on internet & e-commerce law including the IAEM Convention, the Computer Game Developers Conference (CGDC), the Annual Meeting of the Free Speech Coalition, the Recorder Legal Newspaper Roundtable, the Practicing Law Institute in San Francisco, California, the Sedona Conference, and the Privacy and American Business Conference in Washington, DC.